ORDER OF THE GOVERNMENT OF THE REPUBLIC OF MOLDOVA

of February 2, 2018 No. 124

About approval of the Development program of the state internal financial control for 2018-2020 and the Action plan on its implementation

List of amending documents

For the purpose of accomplishment of provisions of article 29 of the Law No. 229 of September 23, 2010 on the state internal financial control (The official monitor of the Republic of Moldova, 2010, Art. No. 231-234, 730), with subsequent changes, DECIDES: the Government

1. Approve:

1) the Development program of the state internal financial control for 2018-2020, according to appendix No. 1;

2) the Action plan on implementation of the Development program of the state internal financial control for 2018-2020, according to appendix No. 2.

2. The Ministry of Finance is the body responsible for coordination of implementation of the Development program of the state internal financial control for 2018-2020.

3. To the interested bodies to take necessary measures for accomplishment of the Action plan for implementation of the Development program of the state internal financial control for 2018-2020 and annually, till March 1, to submit to the Ministry of Finance reports on implementation of actions.

4. To the Ministry of Finance annually, till June 1 to submit to the Government the summary annual statement about the state internal financial control, and also, in case of need, offers on modification and amendments in the Action plan on implementation of the Development program of the state internal financial control for 2018-2020.

5. Declare invalid the Order of the Government No. 1041 of December 20, 2013. "About approval of the Development program of the state internal financial control for 2014-2017" (The official monitor of the Republic of Moldova, 2013, Art. No. 304-310, 1147).

Prime Minister

Paweê Phillip

Countersigns: Minister of Finance

Octavian to Armash

 

 

Appendix №1

to the Order of the Government of the Republic of Moldova of February 2, 2018 No. 124

The development program of the state internal financial control for 2018-2020

I. Determination of problem

1. The government of the Republic of Moldova undertook the obligation to consolidate management of public funds on the basis of the principles of proper management.

2. The principles of proper management consist in transparency and responsibility, profitability, effectiveness and efficiency, legality and justice, ethics and integrity in activities of the public subject which accord with the basic principles of reform of public management.

3. The concept of the state internal financial control, including systems of internal managerial supervision, assumes radical change in culture of management and management of public resources. By means of development of the state internal financial control Government aims at increase in efficiency of public management, reducing bureaucracy, minimization of corruption risks, provision of high-quality services for citizens and business environment.

4. Managers of all levels of public subjects bear responsibility and shall be responsible for the activities not only in the field of policy and operational processes, but also and in the field of internal managerial supervision.

5. The concept of the state internal financial control is intended for increase in managerial responsibility and is focused on 3 elements:

1) internal managerial supervision – the system organized by manager of the public subject and its personnel for the purpose of ensuring proper management, covering set the politician, procedures, internal regulations, processes and actions performed within the public subject for risk management and provision of reasonable guarantees of achievement of tasks and the planned results;

2) internal audit – the independent and objective activities for provision of guarantees and consultation directed to increase in the importance and improvement of activities of the public subject. Internal audit renders assistance to the public subject in accomplishment of its tasks by means of systematic and methodical approach, estimating and increasing process performance of management of risks, control and management

3) the Central management on harmonization - the division of the Ministry of Finance responsible for development and monitoring of policy in the field of the state internal financial control.

6. The previous development program of the state internal financial control was ambitious and did not achieve in full common goal - strengthening of managerial responsibility for optimum control of resources. The carried-out analyses elicit the fact that there is space for improvement of managerial culture at all levels of public administration.

7. Development of the state internal financial control is key to success of reform of public administration which is directed on:

1) increase in responsibility of managers and employees;

2) development of the corresponding state policy;

3) upgrade of public services;

4) effective management of public resources;

5) modern human resources management.

8. In the context of reform of management of public finance the system of the state internal financial control, as its tool, shall increase trust of the population to the state, simplify resource management for goal achievement, provide to interested persons reliable information about capability to manage the budget and, at last, to submit to Parliament reports on overall effectiveness of the public sector.

9. The concept of managerial responsibility, including internal managerial supervision, is not completely functional. There is number of the obstacles interfering the subsequent effective implementation and development of system of the state internal financial control such as:

1) low interest of top managers in practice - they either are not interested in general, or show limited interest in implementation of system of the state internal financial control;

2) the isolated reform - lack of coordination, cooperation and communication between the undertaken reforms. At the moment the Ministry of Finance is considered the single body responsible for implementation of system of the state internal financial control;

3) the limited understanding at the level of top management, and also among employees that internal managerial supervision and internal audit - implementation financial represent management and control is understood as technical reform, but not as management reform, and internal audit is not perceived as integral part of the extensive control system;

4) the limited proposal of specialists in the field of public finance - for organizations which implement financial reforms is difficult to find and hold specialists, such as internal auditors, accountants and economists;

5) the legal and organizational base - formal structural delegation of competences and responsibility with not clear segregation between operational, financial and budget processes and processes of support is partially implemented;

6) is a lot of small divisions of internal audit in public sector, and part of internal auditors have limited working experience in the field of public finances and audit;

7) is too much parallel reforms - all reforms require attention and efforts from management and hard work for implementation of system of the state internal financial control. As a result, managers pay more attention to other reforms, than reform of the state internal financial control.

10. Reform of the state internal financial control is dependent and there is under direct influence of decisions and development in implementation of Reform of public administration and Reform of management of public finance.

11. Considering that the main regulatory base is developed, it is necessary to be concentrated on identification and/or creation of advanced methods of implementation, and then on their distribution in all public sector.

12. Thus, at the initial stage the Development program of the state internal financial control for 2018-2020 (further - the Program) is intended for the ministries and other central administrative authorities, the National company of medical insurance, National cash desk of social insurance, in cooperation with primeriya of municipiums of Chisinau, Belts and Kakhul. Afterwards, the learned lessons and proper practice will be widespread among all public subjects.

13. This Program contains the short description of the current situation of system of the state internal financial control, and also the directions of development on 2018-2020.

14. This Program will be implemented in cooperation with representatives of professions from the field of management of public finance, internal audit, and also with the interested organizations. The Twinning project for consolidation of managerial supervision and the state internal audit financed by the European Union, and also the Ministry of Finance of Holland will give support in implementation of this Program.

II. Current situation

15. There are misunderstandings concerning the concept of the state internal financial control and, in particular, component of financial management and control. They proceed from two sources and are in traditional approach of public administration of the Republic of Moldova.

16. The first misunderstanding arises because internal managerial supervision is considered as exclusively financial reform which is of interest only to the Ministry of Finance.

17. The second misunderstanding concerns nature of system of internal managerial supervision as it is understood by accountants and managers. Internal managerial supervision, as a rule, is considered only financial and budget control which purpose is trackings of compliance with laws and rules. Therefore, this control is attributed to Financial service. Internal managerial supervision are not considered as integral part of successful management or as direct responsibility of manager.

18. The Ministry of Finance is the appointed body responsible for development of model and development of policy of the state internal financial control. This fact, together with the general name of policy of "the state internal financial control", determines politicians, managers and employees to consider policy of internal managerial supervision as simple financial and budget control, having narrower or even limited scope.

Achievements in the field

19. In recent years actions for creation of conditions for implementation of system of the state internal financial control are taken, namely:

1) the regulating base by adoption of law No. 181 of July 25, 2014 on public finance and budget and tax responsibility, the Law No. 229 of September 23, 2010 on the state internal financial control, approvals of standard Regulations on activities of financial services, National standards of internal audit, National standards of internal managerial supervision, methodology and managements on their application is established. Systems of self-assessment and the activity reporting, both for internal audit, and for internal managerial supervision are also installed;

2) 92 divisions of internal audit in the public sector in which 116 internal auditors work are created; 46 of them have qualification certificates;

3) the main responsibility of financial services, responsibility specific to internal managerial supervision is established integrated into domestic situations about the organization and functioning of divisions in the majority bodies of the central public management and in some bodies of local public authority of the second level;

4) the first Program of continuous professional development of internal auditors is developed, modules and training materials both for managers, and for internal auditors are implemented, training and informing seminars are held. The foundation of national system of certification of internal auditors is also laid.

III. General tasks of the Program

20. Top management is responsible for provision of effective and productive state services. To reach it, heads shall know interrelation between financial resources and what shall be reached (tasks) that means efficiency and effectiveness, and also method of their achievement.

21. Moreover, the top manager shall organize rationally activities, having convinced that all components of internal managerial supervision exist and are functional.

22. In addition, obligations shall be delegated, and in public subjects the responsible structure shall be created. This responsibility shall cover both use of confidential resources, and achievement of tasks.

23. In other words, responsibility shall cover more, than financial and budget control, shall cover how internal managerial supervision is applied that went not so, and the changes undertaken by management for correction of situation.

24. Responsibility is important also from the external point of view: in relation to administrative and political hierarchy, and also to relation with citizens. In this respect, use of the balanced mechanism has principal value.

25. General tasks of the Program consist in the following:

1) integration of internal managerial supervision in operational, financial and economic processes and processes of support - from stage of planning of activities and resources before budget implementation and accomplishment of operational plans and before their monitoring and the reporting;

2) inclusion of management of risks in processes and decisions - establishment of general approach, both to control of compliance, and to efficiency and effectiveness of transactions;

3) ensuring communication between plans and operational tasks with the resources necessary for their achievement - plans have financial measurement, and financial accounting systems provide high-quality information for decision making and monitoring of their implementation;

4) efficiency evaluation of system of internal managerial supervision - internal auditors show the advantage as the tool for timely identification of problem and weak points, and also provision of the corresponding recommendations for enhancement of systems and transactions;

5) protection of the state financial interests - more accurate segregation between control obligations of heads, internal audit and financial investigations. In this respect Financial inspection will carry out other role. Obligations on financial inspection which are fulfilled upon the demand of law enforcement agencies now, will be transferred to law enforcement agencies, and their results will become more effective. The obligation to carry out inspectorates for the address of other persons, except the Government, will not exist any more. The remained obligations will be transformed to financial inspection of compliance of budget implementation upon the demand of the Minister of Finance. In addition, function of audit at the level of the Government which will provide guarantee of functionality of the main fields of management of public finance, proceeding from competence of the Ministry of Finance will be created. More clear split of these tasks together with professionalizing of personnel will create steady basis for:

a) strengthenings of systems of management of public finance;

b) prevention and identifications of mistakes and violations;

c) compensations of money and the appropriated assets.

26. In this context, this Program shall promote achievement of earlier noted general tasks. Implementation of general tasks will be performed in the ratio and with other reforms and the involved parties by means of:

1) creations of the new platforms approved with the shortcomings and obstacles stated in the Program which will determine more favorable conditions for effective implementation of system of the state internal financial control;

2) the analysis of shortcomings and obstacles, and also determination of potential decisions on their overcoming.

27. The involved parties will make efforts for broader participation within the Program, mobilization of all relevant participants and ensuring coordination, cooperation and communication between the key parties participating in many operating reforms. The Ministry of Finance initiates also establishment of the relations of cooperation with the specialized international organizations.

28. In the considered period of this Program, both for the Government, and for each public organization separately, the following changes are expected:

1) initiation of professionalizing of key functions of financial management;

2) targeting at result, not only at resources, with real emphasis on efficiency and effectiveness;

3) concentration of political level on strategy and politicians, and also on determination of tasks and standards of efficiency;

4) increase in managerial responsibility;

5) strengthening of discipline in management processes.

29. Actions within this Program will be directed to overcoming the obstacles revealed in present system and creation of premises for consolidation of managerial responsibility according to the following specific objectives:

1) coordination of development of system of the state internal financial control and ensuring coordination with general politicians and programs;

2) development of the existing systems of internal managerial supervision;

3) strengthening of internal audit function;

4) strengthening of professions in the field of management of public finance;

5) explanation of role of Financial inspection.

30. Strengthening of the state internal financial control will be reached by means of:

1) creations of conditions, platforms and ought the practician of implementation and/or development of the state internal financial control within the ministries and other central industry bodies of public management, the National company of medical insurance, National cash desk of social insurance and in cooperation with primeriya of municipiums of Chisinau, Belts and Kakhul;

2) distribution of the learned lessons and front lines national the practician in all public sector, including the autonomous subjects, public subjects subordinated to the central bodies of public management, and also bodies of local public board.

31. Council of the state internal financial control will perform monitoring and the analysis of actions within the Program, to study obstacles and shortcomings of implementation, to determine risks, to represent offers on their elimination, and also to report on the achieved results on the Minister of Finance.

Appendix № 2

to the Order of the Government of the Republic of Moldova of February 2, 2018 No. 124

The action plan on implementation of the Development program of the state internal financial control for 2018-2020

See the Action plan on implementation of the Development program of the state internal financial control for 2018-2020 (16Kb In original language)

 

Disclaimer! This text was translated by AI translator and is not a valid juridical document. No warranty. No claim. More info